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Since July 31, cotton prices have wanted to do nothing but go down. One might say that it is simply a function of oil’s decline. This is, no doubt, a driver. But I don’t buy it in full. After having close to zero correlation for most of the year, both have slid meaningfully over the past few weeks. In fact, cotton has been higher beta than oil in recent weeks – a reversal of what we have seen in past cycles when they have correlated.

This is pretty important to me given that a material slide in cotton costs could ease the apparel industry’s supply chain strain for a brief while – which would cause me to evaluate where I stand on some of these names vis/vis horrible ‘trend’ and decent ‘trade’.

Leave it to my colleague Andrew Barber to find something in the commodity history books to explain this away. The analysis by Moore Research Center below shows how the seasonal nature of planting/harvesting cotton rather consistently flows through to the yy change in the price of the commodity.

The seasonally weakest time period over the past 33 years? You guessed it. Mid August. It is always tough for me to stomach that ‘seasonal trading charts’ like this have the right to exist. We’ll see if this continues in the coming weeks.